EUR/USD: The report NFP will be more influential than the Fed on the Dollar this week

October 28, 2019

The macroeconomic programme of the week is particularly dense, including in respect of events potentially influential on the EUR/USD.

However, 2 events stand out for their importance : The Fed meeting Wednesday, and the report to the NFP on job creation, US Friday.

In this regard, it should be noted that in a analysis note published yesterday, the analysts ING (AS:INGA) say the main risk for the us dollar this week is more of the potentially disappointing on employment in the United States, rather than the lower rates from the Fed.

They anticipate as well a bias is slightly bullish for the EUR/USD pair, providing for a range 1,1040/1,1205.

“With the full taken into account by the market of the decline in Fed funds rate in October and our point of view, according to which it is unlikely that the central bank commits in advance to a cycle of reduction be more significant (instead, it should stick to its reactive approach to reductions in insurance), the main engine dollar should be the us economic data.

We expect a GDP slightly higher than the GDP of the third quarter Wednesday, but we see a risk for the dollar arising from the report of October on the american labour market on Friday. The payroll non-farm is likely to decline (ING anticipates 70K against 95K for the market) and lead to disappointment due to the fact that the strike of General Motors (NYSE:GM) weighs in on the figures. Such a figure would increase the chances of new rate cuts (even if the Fed does not report) and would weigh on the dollar.

For the EUR/USD, “we expect that the level of 1.1200 act as a strong resistance. The optimism on the Brexit, that fades, also suggests an erosion of this factor is bullish for the EUR/USD.”